I was half an hour early for my appointment with Chris West at Taj Lands End in Mumbai, wondering what I would do with so much spare time. I gingerly texted West’s colleague, who was coordinating the meeting, telling her that I was at the venue. As it turned out, West was already there, preparing himself for what he called “a big” meeting, paving the way for our conversation to start 20 minutes ahead of time.
The habit of thinking ahead has worked well for this grants provider for social enterprises. West is director of the UK-based Shell Foundation, which was established by oil group Royal Dutch Shell in 2000 as an independent charity operating with a worldwide mandate to address environmental challenges and promote global development through financial grants to companies focusing on social impact.
Dressed in a blue and white striped shirt, the blue-eyed, affable 53-year-old is remarkably different from his counterparts in the funding world—5 minutes into our meeting, he takes off his blazer, saying that he prefers to be casual. Currently, he is on the lookout for entrepreneurs in India who can create social impact in terms of job creation and improving life in an economically sustainable and scalable way.
“I believe that long-term, patient capital for social enterprises will not only help them sustain themselves but also help in bridging the increasing inequality (between the ‘haves’ and ‘have nots’) in the world,” says West.
Shell Foundation, which offers grants and donations to social enterprises, has been in India since 2000 and currently has eight partners here. These partnerships are with Envirofit International, which is in the business of making clean-technology cooking stoves; Husk Power Systems, which provides power to remote villages in Bihar by converting discarded rice husk into electricity; Project Dharma, Gajam India Pvt. Ltd, which is creating a rural distribution network for providing customized products and services at affordable price points to rural households at the bottom of the pyramid; D.light Design, a lighting and power company which offers solar-lighting solutions to families living without electricity (the foundation supports its work in Maharashtra and Uttar Pradesh); sustainable supply chain CottonConnect; EMBARQ India, a network of experts which works on sustainable transport solutions targeted at improving the quality of life in cities; The Accelerator (in partnership with First Light Ventures and Shell Foundation), which helps start-ups at an early stage by offering funding and skills support; and IntelleCash, a non-banking finance company offering commercial loans to small and medium enterprises.
Entrepreneurs are a special breed of people who look at problems differently, says West, who has a doctorate in ecology from the University of Oxford, UK, and had an environmental consulting business which he created and sold in 1992, before joining Shell Foundation. “Being a social entrepreneur is even more difficult, as not only do you have difficulties of scaling but also need to have products and offerings that are affordable to cater to those who otherwise were not catered to.”
Over the last decade, West has seen changes in Shell Foundation’s strategy for India. Shell Foundation started functioning in India in collaboration with not-for-profit NGOs with the aim of addressing issues around poverty, energy and environment. “While they are good, we are not seeing the level of impact, scale and sustainability in what we were supporting them for,” says West.
"IN PARENTHESIS: Ecology is an area of interest for Chris West and he likes the works of Charles Darwin. Not particularly fond of e-book readers, he calls himself a dinosaur, and prefers the old way of reading books printed on paper. A self-confessed lover of Indian food, he indulges in street food, his favourites being Kerala-style fish curry served on a banana leaf and sweets. He prefers going to local restaurants over fine-dining places to relish the “real local flavour”."
From 2004, it changed this strategy and is now involved in offering grants to social enterprises. “These are the entrepreneurs who have married the desire of scale with social impact and we find them to be far more effective than any other partners,” says West, adding that they function like angel investors, backing businesses and ideas at an early stage.
“We will create a pool of social enterprises that can be considered by larger funds,” says West. The foundation is now looking to work directly with more local enterprises. “We don’t give charity; early results are showing that it yields positive results.”
Preferring to work in partnerships, in joint venture-like structures, West feels taking equity stake may not work too well in the social enterprise sector in the early stages. “I would be a little hesitant of people offering equity too early, it can be disincentivizing at some level,” he says.
He has had his share of disappointments in India—one of the partnerships failed. It is not surprising though, because in the funding business, about 10% of collaborations typically end up being write-offs. “In this case, the partner had a really good energy service offering, but instead of developing it, they wanted to innovate. Innovation is good, but it doesn’t bring scale,” he says, refusing to name this enterprise.
To protect its interests, Shell Foundation has become selective about potential partners. Also, it does not fund any business 100%; the entrepreneur needs to have his skin in the game by bringing in his own capital. Moreover, the capital is given in tranches, based on milestones, with someone from Shell Foundation constantly working on the sidelines with the entrepreneur.
"We don’t give charity; early results are showing that it yields positive results."
When it comes to returns, West is clear that it would be inappropriate to expect high returns from these businesses. Most social enterprises would struggle to give venture capital-like returns of over 20%; at best, they can offer a high single-digit internal rate of return in the long term, he explains.
He considers himself lucky to have a good job and a loving family. “I don’t have to wear suits all the time, which is nice,” he laughs. Calling himself a “least brand-conscious” person, he confesses that all his clothes are chosen by his wife, Michelle. He drives a Land Rover at home in the UK, 50 miles (80km) outside London, and calls himself a weekend chauffeur for his three sons, aged 8, 11 and 13.
“We are a taxi service for the boys on weekends and have to ferry them from tennis, swimming, cricket... We make it a point to eat together and I supervise their homework,” he says. As he travels often, he zealously keeps his weekends free for family. When he goes back after a trip to India, he takes back Indian newspapers and sweets for the family.